NCC, not AEMC, to be decision-maker on applications for covered pipelines to be subject to ‘light regulation’, says MCE committee

The MCE decided that the NCC (National Competition Council), and not the AEMC (Australian Energy Market Commission) was the decision maker in relation to applications for covered pipelines to be subject to ‘light regulation’ (see also rules 33-38), according to the Standing Committee of Officials of the Ministerial Council on Energy (25/7/2007).

Designated pipelines: This subdivision allowed coverage and light regulation decisions to be made by the NCC at the same time. Subsection 103(2) and section 105 reflected the MCE’s decision that no application for a light regulation determination may be brought in respect of a “designated pipeline” – a pipeline prescribed by regulation. A light regulation decision now took effect either immediately or within 90 days after it was made. When making or revoking a light regulation determination the NCC was required to have regard to the national gas objective and carry out a form of ‘net benefit test’ as recommended by the Expert Panel – although not a strict quantitative assessment. The objective was that the net benefit from regulation was maximized after considering the potential cost imposed by regulation.

The NCC was required to consider:

The likely effectiveness of the forms of regulation to promote access to pipeline services;

the costs of an efficient service provider, efficient service users and prospective end users and likely costs of end users;

the form of regulation factors;and

anything else the NCC considered relevant.

National Gas Objective: This provision implemented the MCE’s decision in relation to the ‘light regulation’ decision maker – the MCE or a designated pipeline service provider may request the AER (Australian Energy Regulator) to conduct a review into and report to the MCE as to whether a pipeline should continue to be a designated pipeline. The AER (Australian Energy Regulator) was required to have regard to the National Gas Objective and whether there has been a material increase in competition in a market served by the designated pipeline. The AER would publish the report on its website and, if a service provider requested the review, give a copy of the report to that service provider. Note also that the MCE may also decide to remove a pipeline from the list of designated pipelines without advice from the AER.

Reference: The second exposure draft of the National Gas Law (NGL) and National Gas Rules (NGR), Standing Committee of Officials of the Ministerial Council on Energy, July 2007.